The World Bank (WB) proposed a moderate scenario in which it revises down the growth trends of Latin American and Caribbean (LAC) countries, including the Dominican Republic. The institution reduced its January 4.9% local growth forecast to 4.4% for 2023. Despite the slight decline, the country is among the fastest growing economies.
At a press conference, WB’s chief economist for Latin America and the Caribbean, William Maloney, presented the entity’s most recent report: “The potential of integration: opportunities in a changing global economy”, highlighting that “for the Dominican Republic a growth of 4.4% is expected for this 2023 and 5% for 2024-2025”.
In fact, he argued that the regional perspective in terms of gross domestic product (GDP) indicates that countries as a whole will grow 1.4% in 2023, a lower rate than anticipated. Instead, rates of 2.4 percent are expected for 2024 and 2025, “too low to make significant progress in poverty reduction.”
Neighbors affect
Of 28 countries analyzed and compared by the international organization, the Dominican Republic is among the best performers, unlike Haiti, whose average GDP balance was unfavorable for five consecutive years. The bank estimates improvement from next year: the forecast would go from -1.1% in 2023 to 1.5% in 2024
Diario Libre had the chance to ask how much the complicated socioeconomic situation in Haiti affects the economic performance of the Dominican Republic in order to ascertain if the variation on investments and the economy were under pressure.
Maloney’s response was not specific, but encouraging. “The situation in Haiti is tremendous and involves several general aspects, so the Dominican Republic cannot control the situation alone,” he warned.
Maloney said that the World Bank will continue supporting both countries in order to finance essential projects that alleviate social problems.
Key: Forecasts for LA and Caribbean countries (annual percentage variation, unless otherwise indicated)
Real GDP growth rate E= estimate F= Forecast Source: World Bank (data calculated in March 2023)
Lack of regional integration
The WB representative explained that Latin America and the Caribbean have “enormous potential”, both in its traditional areas of comparative advantage and in new areas emerging from the green economy. The challenge remains to mobilize investment and knowledge to seize these opportunities and build diversified and dynamic economies.
He noted that, in the last 20 years, the region has not availed itself of the benefits of greater integration into the world economy in terms of economies of scale, transfer of knowledge, technology and capital.
Despite not having a concrete answer on the decline in growth expectations, he said overall trade exposure stagnated and foreign direct investment declined in most countries, even as nearshoring and reshoring have become more common.
To improve this, he raised the need to broaden trade exposure and avail of comparative advantages. “If the region wants to raise its growth rate, it is essential to expand into new service sectors, reduce its environmental footprint and take advantage of its comparative advantages according to the geographical location of destinations,” he said.
Source:
Diario Libre